Leasehold Interests and Land Use Traps

Posted by Russell P. Schropp on June 18, 2012

open till late.jpgA recent decision from the Florida 4th District Court of Appeal illustrates some special land use concerns that come into play when the affected party holds a leasehold interest rather than fee simple ownership.

Changing Regulations Can Affect Leaseholders

In Village of N. Palm Bch. v. S&H Foster's, Inc., 80 So. 3d. 433 (Fla. 4th DCA 2012), the plaintiff, as a leaseholder, operated an "after hours bar" in Palm Beach County which was permitted to serve alcohol for consumption on premises until 5:00 a.m. The owner of the property filed a petition to voluntarily annex the property into the Village of North Palm Beach. The statutory procedure for annexation required only the consent of the landowner and not the leaseholder. An existing Village ordinance prohibited the sale of alcoholic beverages for consumption on premises between 2:00 a.m. and 7:00 a.m., effectively depriving Foster's of three hours of business it had enjoyed for many years while in the unincorporated county. After approval of the annexation, the leaseholder sought relief in court prohibiting application of the Village's ordinance and allowing the bar to remain open until 5:00 a.m.

The Ruling

The trial court ruled in favor of the bar and found that the bar was "grandfathered" to operate under the old hours until its leasehold interest expired in 2015, but the appellate court reversed. The appellate court held that the Village had the authority to regulate the sale of alcohol within its borders pursuant to State statute, and that the Village properly followed the statutory procedure for voluntary annexation. Accordingly, the bar had to comply with the Village's liquor sales ordinance, and was not "grandfathered" under the County's old hours of operation.

Bottom Line

The case illustrates how leaseholders can fall through the cracks with regard to zoning and land use matters. The owner of the property often has the ability to proceed through rezonings, annexations, and similar procedures without the consent of the tenant, and notices of code violation and nearby pending zoning matters frequently are sent only to the owner of record. Drafters of leases may well want to consider addressing such matters during lease negotiations, particularly when representing tenants.

Property Owners: You Have A Duty to Protect Your Property Rights

Posted by Bruce E. Sands on August 18, 2011

gavel.jpgThe Fourth District Court of Appeals of Florida recently affirmed the position that a property owner cannot knowingly ignore an impediment to the title of their property. In Nunes v. Allstate Investment Properties, Inc., (So.3d ---, 2011 WL 3107801) the Personal Representative of the Estate of Kathleen L. Phillips, and Marilyn Ann Nunes, individually, (collectively "Nunes"), filed a declaratory action to determine Nunes' right to certain property which she contended was wrongfully conveyed to the current property owners through a series of conveyances originating with a forged deed.

Nunes' former son-in-law and husband forged a warranty deed transferring her interest in the real property to Allstate Investment Properties, Inc. ("Allstate") on October 6, 2003. Allstate, not knowing that the deed was forged, transferred the property to a third party on December 25, 2003; and, the third party subsequently transferred the property to the current owner on December 15, 2004.

The court found that Nunes had actual knowledge of the forged deeds, which was discovered during the deposition of Nunes' husband during divorce proceedings in May of 2004. After learning of the forgery, Nunes took no action to protect her interests in the real property. The current owner took title seven months later (December of 2004).

The 4th DCA cited Coram v. Palmer, 58 So. 721, 722 (Fla. 1912), wherein the Florida Supreme Court held:

If one man knowingly, though he does it passively by looking on, suffers another to purchase and expend money on land under an erroneous opinion of title, without making known his claim, he shall not afterwards be permitted to exercise his legal right."

The court further cited Zurstrassen v. Stonier, 7[86] So. 2d 65, 68-69 (Fla. 4th DCA 2001), which held that the doctrine of equitable estoppel as set forth in Coram v. Palmer applies to forged deeds.

In affirming the lower court's decision that Nunes was equitably estopped from asserting any interest in the property, the 4th DCA stated that Nunes' failure to timely assert her interest in the real property, although having numerous unrestricted opportunities to do so, was "tantamount to affirmative representation to the public as a whole that 'go ahead and buy as I don't have an interest in this property.'"

Bottom Line

Should you become aware of anything, be it a lien, encumbrance or purported conveyance affecting your property rights, you have the duty to timely take action in order to protect your property rights. In these situations, hesitation kills.

County's Failure to Maintain Roadway May Lead to Taking of Property

Posted by Russell P. Schropp on June 17, 2011

In a new twist on an old case, Florida's 5th District Court of Appeal recently held that the failure of a county to adequately maintain a public roadway may result in a "taking" of property that is accessed by the that road. Jordan v. St. Johns County, 36 Fla. L. Weekly D1095a (May 20, 2011).

At issue was a stretch of former State Highway A1A which runs along the Atlantic Ocean in St. Johns County. The road had been deeded to the County by the State in 1979 after the State re-routed A1A approximately 800 feet west of its original location. After numerous storms and natural forces caused significant damage to the roadway, a group of owners whose property obtained access via "Old A1A" sued the County for failing to maintain the roadway in useable condition. The County took the position that it had the sole authority and discretion to determine what constituted reasonable roadway maintenance. The trial court granted summary judgment in favor of the County, and the landowners appealed.

The 5th DCA reversed the trial court and held that:

  1. the County had the obligation to maintain the roadway at a "reasonable level . . . that affords meaningful access," unless or until the County formally abandons the road; and
  2. a county's decision not to maintain a roadway at a reasonable level could constitute effective abandonment of the roadway, depriving the property owners of access to their property without compensation. 

The summary judgment on these counts was reversed and remanded to the trial court for further proceedings.

In recognizing a potential uncompensated taking of access rights, the 5th DCA relied on the 1989 Florida Supreme Court decision in Palm Beach County v. Tessler, 538 So.2d 846. In Tessler, the court held that roadway improvements that eliminated a commercial property owner's direct access to an adjacent arterial could result in a compensable taking of the owner's access rights if the remaining access to the property was so circuitous as to essentially render the property unusable for commercial purposes. Very few landowners had been able to successfully use the Tessler decision to establish a taking based upon deprivation of access, but the St. Johns County case provides a warning to local governments that decisions pertaining to roadway access can lead to a potentially compensable taking of real property. A motion for rehearing is presently pending before the court.

 

Sweeping Changes to Florida's Growth Management System are Here

Posted by Amanda L. Brock on May 13, 2011

As promised, the Florida Legislature recently adopted House Bill 7207 which drastically changes the landscape of Florida's Growth Management procedures. The bill itself comprises 349 pages (the majority of which deals with matters unrelated to growth management) and the drastic changes it proposes are too numerous to cover in a blog entry. A sampling of some of the major provisions include:

  • Eliminates the state concurrency mandate relating to transportation, schools and parks (though local governments may retain their local concurrency requirements);
  • Increases certain development of regional impact ("DRI") thresholds (including office and commercial uses) and eliminates other uses from DRI review (including motel/hotel and industrial uses);
  • Provides a four-year extension to commencement, phase, build-out and expiration dates of DRIs regardless of any prior extensions;
  • Grants a two-year permit extension to any permit that was eligible under Senate Bill 360 but ineligible under Senate Bill 1752;
  • Provides a new two-year extension for certain permits with expiration dates falling between January 1, 2012 and January 1, 2014;
  • Removes the limitation of only twice-per-year comprehensive plan amendment cycles;
  • Allows for expedited review of most comprehensive plan amendments, with some exceptions;
  • Adjusts standards of review for challenged amendments - if the Department of Community Affairs ("DCA") challenges a local government's in-compliance determination, the local government's determination is presumptively correct; the DCA can only overcome this presumption by a preponderance of the evidence standard; and
  • If a third party challenges a local government's in-compliance finding, DCA cannot intervene in the action, and the local government's determination must be upheld if it satisfies the more relaxed fairly debatable standard.
Of course, this bill isn't law just yet - the Governor has 15 days after presentation of the bill to take action (sign or veto). If he signs the bill, it becomes law upon his signature. If he takes no action, the bill would become law on July 5th. As I mentioned, there is a lot more in this bill and its companion legislation of HB 7001- look for much more to come on this important piece of legislation!

 

 

Code Enforcement Lien Case Certified to Florida Supreme Court

Posted by Russell P. Schropp on April 14, 2011

On March 25, we reported on a recent appellate case in which the court refused to recognized the "superpriority" status of code enforcement liens established by a local ordinance. We indicated that a motion was pending to certify the case to the Florida Supreme Court. In a recent ruling on that motion, the 5th District Court of Appeal certified the following question to the Florida Supreme Court as one of great public importance:

Whether … a municipality has the authority to enact an ordinance stating that its code enforcement liens, created pursuant to a code enforcement board order and recorded in the public records of the applicable county, shall be superior in dignity to prior recorded mortgages?" 

City of Palm Bay v. Wells Fargo Bank, N.A., 36 Fla. L. Weekly  D630a (Fla. 5th DCA March 25, 2011). 

We will report further on this case as it progresses.

Code Enforcement Liens Lack Priority Over Prior-Recorded Mortgages

Posted by Russell P. Schropp on March 25, 2011

Code enforcement liens that were granted "superpriority" status by a local government ordinance were held to lack priority to a prior-recorded mortgage in a recent Florida appellate court decision. City of Palm Bay v. Wells Fargo Bank, N.A., 36 Fla. L. Weekly D161 (Fla. 5th DCA January 21, 2011).

The City of Palm Bay enacted an ordinance creating its Code Enforcement Board in 1997. Under the ordinance, liens on real property created by the Board would be co-equal with state and local tax liens, and would be "superior in dignity to all other liens, titles and claims."

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Judicial Update: The Continuing Saga of SB360, Community Renewal Act

Posted by Russell P. Schropp on January 24, 2011

The 2009 Florida Legislature's attempt to provide some relief to the development community met its demise in a Tallahassee circuit court. Circuit Judge Charles Francis' order of Final Summary Judgment, entered on August 26, 2010, declared Senate Bill 360 unconstitutional as a violation of Article VII, Section 18(a) of the Florida Constitution, which prohibits the adoption of "unfunded mandates" to local governments. City of Weston v. Crist, Case No. 2009CA2639, 2nd Jud. Cir. According to the opinion, the law would have required certain local governments to spend over $3 million in the aggregate to process plan amendments required by the bill.

The Court found that this expenditure would not be "fiscally insignificant" so as to exempt the bill from the constitutional restrictions. Senate Bill 360 (also known as the Community Renewal Act) attempted to provide several boosts for development interests, including:

  1. exempting development from the Development of Regional Impact process in local governments identified as Dense Urban Land Areas (DULAs);
  2. establishing transportation concurrency exemption areas in local governments designated as DULAs; and
  3. providing two year extensions for certain permits that expired between September 2008 and December 2012.  

The Court's judgment declared Senate Bill 360 unconstitutional and ordered it "expunged" from the official records of the State. During its 2010 session, the Florida Legislature took some preemptive measures anticipating a possible negative decision from the Court on Senate Bill 360. Senate Bill 1752 re-enacted the permit extension provisions of Senate Bill 360 and provided for an additional 2-year extension under certain conditions. Senate Bill 1752 requires notification be provided to the affected government agency by December 31, 2010. Because local government and agency interpretations and the application of Senate Bill 1752 may vary, permit holders who exercised their right to an extension under Senate Bill 360, or who want to exercise their rights under Senate Bill 1752, are strongly encouraged to seek competent legal review and guidance.